Wednesday, February 4, 2009

Adoptions in 2008 Qualify for $300 for Each Child Added in the Family Under New Recovery Rebate Credit*

Recovery Rebate Credit Information Center, IRS

The recovery rebate credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion.

Generally, a credit adds to the amount of your tax refund or lowers the amount of taxes owed. Therefore, the amount you receive for the recovery rebate credit will be included as part of your refund, as shown on your tax return.

You May Be Eligible

People who fall into the categories described below may be eligible for the recovery rebate credit this year:

* Individuals who did not receive an economic stimulus payment.

* Those who received less than the maximum economic stimulus payment in 2008 - $600 per taxpayer; $1,200 if married filing jointly - because their qualifying or gross income was either too high or too low.

* Families who gained an additional qualifying child in 2008.

* Individuals who could be claimed as a dependent on someone else's tax return in 2007, but who cannot be claimed as a dependent on another return in 2008.

* Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008.
How to Get the Recovery Rebate Credit

You need to claim the recovery rebate credit on Form 1040, 1040A or 1040EZ. The instructions for these forms will show you which lines to use. Unlike the economic stimulus payment, the recovery rebate credit will be included in your tax refund for 2008 and will not be issued as a separate payment.

The IRS Will Figure the Credit for You in Most Cases

You can let the IRS figure the credit when you file your 2008 Form 1040, 1040A or 1040EZ. If you're filing on paper, simply follow the line-by-line instructions to choose this option. If you're filing electronically, the software will figure the credit for you.

Or You Can Figure It Yourself

Likewise, you can figure and claim the recovery rebate credit on your 2008 Form 1040, 1040A or 1040EZ. Two interactive online tools will be available to help you with the calculation, the Recovery Rebate Credit Calculator and How Much Was My 2008 Stimulus Payment?

The Recovery Rebate Credit Calculator will help you figure the amount you should claim on your 2008 tax return. The worksheet in the Form 1040 instruction booklet can also help you figure your credit by hand. To use the Recovery Rebate Credit Calculator or complete the worksheet, you'll need the amount of your 2008 economic stimulus payment, if any. This amount was provided on Notice 1378, Economic Stimulus Payment Notice, sent by the IRS to taxpayers who received a payment.

You need to know the amount of your 2008 economic stimulus payment to determine if you are eligible for the Recovery Rebate Credit. You will need the total amount of your stimulus payment to complete the Recovery Rebate Credit worksheet that is in the Form 1040, 1040A and 1040EZ instruction booklets. Even if your payment was reduced to satisfy other debts, as would be stated on your Notice 1378, you still need to include the total. If you received more than one payment - and more than one Notice 1378 - enter the total of all payments you received.

If you don't have Notice 1378, you can use How Much Was My 2008 Stimulus Payment? to look up the amount you received.

Has Your Filing Status Changed?

If your filing status changed for 2008, follow these directions to determine the amount of your total 2008 stimulus payment. You'll need to use this amount when you calculate your 2008 Recovery Rebate Credit.
Find the Answers to Your Questions

You might find what you're looking for on our question and answer page.

Related Items:
* IR-2009-10, IRS Offers Tips to Avoid Recovery Rebate Credit Confusion

* Special Edition Tax Tip 2009-2, Four Tips to Help Taxpayers Avoid Errors On the Recovery Rebate Credit

* Economic Stimulus Payment Information Center
Qualifying Children and Dependents

Any child under age 17 who is related to the taxpayer by blood, marriage, adoption or foster arrangement and whom the taxpayer can claim as a dependent for 2008. Dependents age 17 and over do not qualify for the additional rebate. Dependents of any age do not qualify for the rebate in their own name even if they earn their own income.

What's the Maximum Recovery Rebate Credit?

$600 for unmarried persons and $1,200 for married couples. Plus an additional $300 per qualifying child. The credit is reduced by any economic stimulus rebate you received.

* Please see original information with all associated links for detailed information and helpful tools on


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Children's Hope International said...

A family responded to a posting of this information with an interesting math to notice:

"I was reading the tax advice in the Noticiero. I've already got my taxes done (minus a social security number) so I actually already know most of this. I noticed you mentioned the recovery rebate credit. Due to an interesting trick of the math, only very high income adoptive
families will get anything from it.

If a family added a child by foreign adoption in 2008, then they are claiming the adoption credit. And, except for very high income families, the adoption credit will reduce their 2008 tax liability to zero. The recovery rebate credit is not refundable and is applied after all other credits are figured, so they won't get anything.

Adopting families do get the child tax credit (actually the additional child tax credit, which is the refundable version).

Anonymous said...

Just did my taxes using TurboTax, and I ran into the same situation. Because the adoption credit reduced my tax liability to zero, we will get nothing for the recovery rebate.

I thought this was a mistake, so I went to the trouble of doing the math manually using the IRS "Recovery Rebate Credit Worksheet" and came up with the same answer - our credit remained zero.

Interestingly, if our income had been $150,000 (about twice our actual income), we would have exhausted 100% of the adoption credit and still had enough tax liability to qualify for the recovery rebate credit.

Also, if we had given birth to a child, we would have qualified for the credit.

Doesn't seem fair (gee, I doubt anyone has ever said that before about our tax system).